Monday, July 24, 2017

Money from Nothing

Traditionally,
venture capital firms are the life blood of Silicon Valley-based tech startups;
however, one type of technology, cryptocurrency, is flipping that relationship
on its head. Simply put, digital currency startups don’t need the cash
traditionally supplied by VCs; and now VCs are turning to cryptocurrency
startups for a piece of the action. This reversed relationship is due to a
phenomenon known as Initial Coin Offerings (ICOs). In an ICO, a cryptocurrency
firm offers a percentage of their currency to initial public backers of the
project in exchange for other types of digital currency, mainly Bitcoin. Simply
put, startup cryptocurrency firms can create their own currency and use
mathematical contract algorithms to control the behavior and existence of this
currency. [more...]